Michael Kors, the fashion conglomerate, is about to complete its acquisition of Jimmy Choo, the high brow shoe maker.
It comes after Jimmy Choo’s majority shareholder wanted out, so it could instead focus on consumer goods.
98% of Jimmy Choo’s shareholders agreed to the takeover.
And so has the Russian competition regulator. This is significant because it clears one of the biggest hurdles to the deal’s conclusion.
As “affordable” fashion companies see sales weaken, they’re looking for new customers to ply their wares. That was one of the driving factors behind rival fashion firm Coach’s acquisition of Kate Spade.
And that analysis seems perfectly apt here: Jimmy Choo’s profits are currently soaring. By contrast, Michael Kors is suffering from slower sales and fewer visitors to its shops. So by acquiring the brand, it should lift Micahel Kors’ average margins. And this will be welcomed by investors; there’s certainly a degree of anxiety given the firm’s recent lacklustre performance.
Michael Kors thinks that an expansion of its menswear and ladies wear ranges will widen its appeal. It’s also increasing its investment in its digital sales channel. It hopes these moves will help the firm return to growth.